This will enable the go – ahead for the development of the Project subject to the receipt of remaining government permits.
Key points
- Project finance facility of up to A$440 million completed with four tier one banks
- Combination of generationally low interest rates, no hedging requirement , early repayment flexibility and ability to retain free cash provides Sirius with a highly f lexible and competitively priced financing package
- Finance package together with available cash on hand provides significant funding buffer and a high degree of operational tolerance and str ategic optionality at relatively low cost
- Nova Mining Proposal a pprov ed by the Department of Mines and Petroleum
Australia and New Zealand Banking Group Limited, BNP Paribas, The Hongkong and Shanghai Banking Corporation Limited and Westpac Banking Corporation ("Financiers") wi ll each participat e equally in the Facility, which resides with Sirius’ operating subsidiary Sirius Gold Pty Ltd.
Sirius has selected a Facility limit totalling A$440 million to take advantage of the exceptionally low interest rate environment and to ensure that the P roject is am ply funded for a variety of contingencies, allowing the Company to retain a significant proportion of its current cash holdings .
The Facility comprises a p roject development tranche of A$420 million for development and working capital funding during the c onstruction, commissioning and ramp up stages of the Project , plus a cost overrun tranche of A$20 million . Both funding tranches are available to the Company through to the completion of the ramp up and performance testing phase of the Project as defined by the Financiers ("Project Completion") .
The pricing, terms and conditions agreed with the Financiers are favourable to the Company and reflect both the Financier’s understanding that the Project has low technical and commercial risk s, and the competitive banking environment for quality projects. Whilst the detailed terms of the Facility are confidential, key points are summarised as follows:
- Project development debt facility of A$420 million and c ost overrun facility of A$20 million
- No requir ement to fully draw this Facility and no financial penalties should th is Facility not be fully drawn
- Long tenor f ixed schedule of repayments starting December 2017 and run ning to March 2022
- The Facility can be repaid early at any time without r estriction or financial penalty
- Surplus operating cash flows (after debt service) can be distributed from the project to the parent company ( Sirius ) subject to certain conditions – providing cash for Sirius to use as it wishes
- No mandatory hedging required, but discretionary hedging of currency and metals available
- Minimal level of cash reserving and no mandatory cash sweeping
- Security is provided via a fixed and floating charge over the assets of Sirius’ operating subsidiary – Sirius Gold Pty Ltd
- Corporate guara ntee provided by Sirius only during the period of construction , commissioning and ramp up – this falls away on achieving Project Completion
- Unlike Term Loan Band High Yield Bond debt packages, the Facility is drawn down in stages when needed with interest payable only on the amounts drawn
All due diligence requirements have been completed and typical conditions precedent are required to be satisfied prior to first draw down, which is anticipated to occur in mid – 2015.
In conjunction with the Facility th e Company will contribute an initial cash amount of A$150 million to the Project from its cash position of A $248 million (as at 30 November 2014).
Permitting
The Western Australian Department of Mines and Petroleum (DMP) has notified the Company that it has approved the Nova Mining Proposal , effectively approving the proposed mining activities on the Nova Mining Lease and the associated Miscellaneous Licences for the airstrip and village.
Approval of the Mining Proposal is the second key permitting mi lestone following the recent approval of the Project Management Plan by the DMP . The remaining a pprovals comprise the Works Approval from the Department of Environment Regulation (DER) , the Native Vegetation Clearing Permit from the DMP and the Miscellaneo us Licence and associated approvals for the access road.